TMI Blog1995 (2) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... it Kumar Tiwari. As the original plaintiff and defendant No. 2 died during the pendency of the suit, their legal representatives were substituted in their place. The plaintiff Mohanlal Vyas, according to his allegations in the plaint, made deposit with defendant No. 1 in the year 1948-49, of a sum of ₹ 10,000/- under an oral agreement that the defendant shall pay interest at the rate of ₹ 9/- per cent per annum, which was to be credited in the account books of defendant No. 1 with yearly intervals. Accordingly to the plaintiffs, the deceased, Sharda Charan Tiwari had supplied the account of the said talkies from the year 1960-61 till 1965-66 and had acknowledged the balance of ₹ 1,01,054.96. According to the plaintiffs, defendant No. 3, representing to be a partner of the firm, acknowledge the amount on 17-9-1968 for the Diwali accounting year 1966-67 and also acknowledged the balance for the Diwali accounting year 1967-68. The plaintiff further stated that the defendants applied copies of extracts of the accounts for the Diwali years 1958-59,1960-61 to 1967-68. The plaintiffs further pleaded that defendant No. 3, being a partner of the firm, acknowledged the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a deposit but, in fact, was a loan which was carrying interest and the plaintiff being a money lender has neither maintained the accounts nor has sent the same and is not entitled to interest and costs on it. The defendants denied the acknowledgment of loan and the alleged settlement of account. It was also contended that no payments were made to the plaintiff on 21-1-1970, 3-4-1970 and 22-9-1970, However, in para 23 of the written statement, the defendants admitted payment of ₹ 2,000/- on 21-12-1970. According to the defendants, even this part payment made on 21-12-1970 would not bring the suit within limitation. 6. The learned trial Court framed as many as 8 issues and held that on 17-9-1968, defendant No. 3, for and on behalf of the firm M/s. Sharda Talkies, acknowledged the liability of the firm in favour of the plaintiffs to the tune of ₹ 1,15,599.88 and promised to pay the same. It held that defendant No. 3 acknowledged the liability of the firm on behalf of the firm in favour of the plaintiffs to the extent of ₹ 1,27,979.88. The trial Court also found that though defendant No. 3 retired from the partnership of the firm on 31-3-1970 and another firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no transaction of loan. Limitation would be three years from the date of demand, therefore, the suit is within limitation from the date of demand. In the alternative, it was submitted that in view of the admission of the defendant firm that a sum of ₹ 2,000/- was paid to the plaintiff under a cheque dated 21-12-1970, it would give a fresh limitation. The suit filed on 15-12-1973 is well within time. Counsel for the plaintiffs next submitted that the acknowledgment by Lalit Kumar would bind the firm because in view of Sections 32 and 72 of the Indian Partnership Act, the firm is liable to make payments to the third parties. The partners might have settled their liability but are answerable to the third parties in absence of public notice. We have heard both the parties and have perused the record. 9. The question whether the amount given to the defendant was a deposit or a loan is the crucial question which would decided many of the questions argued. In case, it is held that the transaction between the parties was a 'deposit' then the question of the suit being barred by limitation or the plaintiff being a money lender would not be required to be answered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loan or deposit does not depend merely on the terms of the document but has got to be judged from the intention of the parties and all the circumstances of the case. Even though the transaction is a transaction of deposit the deposit can be coupled with in agreement that it will be payable on demand. Such an agreement can be express or implied and if an express agreement in that behalf is recorded in the document, the transaction of deposit cannot be thereby converted into a transaction of loan and the words we shall pay the said sum cannot convert the 'document into a promissory note. The promise to pay will be involved in a promissory note as well as in a deposit within the meaning of Article 60 (new Article 22} of the Limitation Act, and the Court will have regard to the intention of the parties and the circumstances of the case in order to arrive at the conclusion whether the document is a promissory note. In Abdul Hamid v. Rahmat Bi , relying upon Ann AIR 1965 Mad427amalai v. Veerappa (supra), it was held that the terms 'loans' and 'deposits' are not mutually exclusive terms. There are a number of common features between the two. In a sense a deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord to show or suggest that the defendants were well-to-do persons who were carrying on business and, therefore, they would not have accepted any deposit. It was further contended that defendants were not the bankers and, therefore, the finding recorded by the trial Court that the amount given by the plaintiff was a deposit, was erroneous. Was this a loan or was it deposit payable on demand ? This question, we are called upon to answer. It is a trite law that in case of demand the transaction is a deposit and not a loan. When a khata is opened in the name of a person and interest is regularly added to the said account every year and the account was sent to the person regularly for a long time, it was held by the Gujarat High Court in Ramprasad Firm v. Bai Reva, AIR 1970 Gujarat 269, that the transaction was a transaction of deposit and not that of a loan. In the instant case, it is apparent that the accounts were maintained by the defendant No. 3. He was crediting interest in favour of the plaintiff every year and was sending the accounts to the plaintiff. The books of the firm show that the khata had been in favour of the plaintiff; that the balance and the account was sent every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to show and suggest that the defendant firm was facing financial stringency or was in need of money. If this material aspect of the matter is missing, then it cannot be held that the defendant would take a loan, despite there being no need. The defendant No. 1 itself was crediting interest in favour of the plaintiff on the deposits which were made by the plaintiff and ultimately the said account and the amount was carried forward in the next year. This fact also lends support to the fact that the transaction between the parties was a transaction of deposit and not a loan. 17. The trial Court, in para 29 of its judgment, has mentioned some of the salient features of the transaction between the parties and has held that the transactions involved in the suit were those of deposits and not of loan. We need not repeat the said circumstances. We endorse the same and hold that the transaction between the parties was basically and continued to be of a deposit. It was never intended to be, nor it was understood to be a transaction of loan. 18. Once it is held that the transaction between the parties is a transaction of a loan, then Article 19 of the Limitation Act would be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment under the cheque dated 21-12-1970. Now, therefore, the absence of the cheque would not mitigate against the filing of the suit. Under these circumstances, we are of the opinion that the suit of the plaintiff is not barred by limitation. 21. It was next contended that even according to the plaintiff, he holds money lenders licence, therefore, he is not entitled to costs and interest. The defendants contended that the plaintiff has already been over paid and the suit is liable to be dismissed. This argument is based on the premises that the very first transaction between the parties was that of a loan. But, in view of our finding recorded above, the transaction could not be held to be a loan transaction. Once it is held that the transaction between the parties was a transaction of deposit, then the subsequent conduct of the plaintiff which shows or make him a money lender, would not come to the help or assistance of the defendants. The defendant must prove that the very first transaction between the parties was of loan. In the instant case, the defendants have pathetically failed to prove that the transaction was of loan. Even assuming that the plaintiff subsequently b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion does not arise because the limitation would commence even otherwise, from the date of the notice, i.e., 3-12-1973. But as the question is of general importance, we propose to answer the same. 24. It was argued on behalf of the appellants that in view of Section 20, Sub-section (2) of the Limitation Act, which is an explanation or corollary to Sections 18 and 19, nothing in Section 18 or Section 19 renders one of the several partners chargeable, by reason only of a written acknowledgment signed by any other or others of them. It was argued that even if Lalit Kumar had given any acknowledgment acknowledging liability for a time barred debt, it would not bind the firm or other partners. According to Section 18, where before the expiration of the prescribed period for a suit or application in respect of any property or right has been made in writing signed by the party against whom such property or right is claimed or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. According to Section 19, where payment on account of a debt or of interest on a legacy is made befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for all. The words 'acting for all' is important. It is the principle of agency or authority on which each partner binds or associates, and it has been held by almost every High Court that the authority of the partners to sign, etc. on the firm's behalf is an ordinary rule. The partner has an implied authority to keep it alive and evidence of authority from other partners is not necessary. In the instant case, though a specific authority to give acknowledgment on 6-7-1970 by Lalit Kumar has not been proved, but the facts prima facie show that the new firm which was constituted under the name and style of the same firm was having the father and two sons of Lalit Kumar as partners. It is not the case of the defendant firm that they had informed the plaintiff that Lalit Kumar had already retired from the partnership with effect from 31-3-1970. The defendants cannot be permitted to take advantage of their own wrong. If the defendants had entered into a new agreement after the retirement of a partner, namely, Lalit Kumar. then it was their duty to give a public notice of the fact that Lalit Kumar stands retired from the firm. According to Section 72 of the Indian Partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. Lalit Kumar, therefore, is answerable to the claim of the plaintiff and as no public notice was given to the public, the acknowledgment given by Lalit Kumar would be binding on the firm also. It is not the case of the defendants that Lalit Kumar made acknowledgment in favour of the plaintiff fraudulently contrary to the interest of the defendants, Section 32, Sub-section (3) of the Partnership Act states that notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm, if done before the retirement, until public notice is given of the retirement. A notice under Sub-section (3) relating to retirement may be given by the retiring partner or by any of the partners of the reconstituted firm. The consequences of default in giving public notice are two-fold, namely, holding out of the retired partner and estoppel against the firm. The principal as stated above, in the circumstances of the case, is that as long as a public notice is not given, the firm will be answerable for acts of the retired partner and later for acts of the firm, provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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